Downstate school districts could escape increased pension expenses under a proposed cost shift if a House pension reform plan is approved, lawmakers said Tuesday.
Rep. Elaine Nekritz, D-Northbrook, said benefit changes and higher employee contributions contained in the House plan would cover downstate teacher pension costs going forward. It’s those future pension costs that House Speaker Michael Madigan, D-Chicago, wants to shift away from the state and onto local school districts.
“The employer (ongoing) cost would be zero,” Nekritz said. “I think that will be part of the discussion on cost-shift going forward.”
Madigan said he plans to pursue cost-shift legislation before the General Assembly’s scheduled adjournment on Friday. He said the state should not be paying pension costs for non-state employees.
Republicans and many downstate Democrats have opposed the shift because they fear it will force schools to either raise property taxes or cut their budgets in order to cover the pension expenses.
Nekritz said local school districts would be responsible for covering unfunded liabilities that develop in the future.
The concept hinges on the General Assembly approving Senate Bill 1, which contains the sweeping House pension reform plan. It raises the retirement age for workers, reduces the cost of living adjustments for retirees and increases employee contributions among other things. The bill does not give employees a choice of retirement changes.
The Senate has approved a pension reform plan that gives active and retired employees multiple choices for changing their benefits. Senate President John Cullerton, D-Chicago, has said he believes offering a choice is the only way a reform plan will survive a court challenge.
Nekritz and Rep. Darlene Senger, R-Naperville, released actuarial numbers Tuesday showing an even greater 30-year savings from the House plan than was previously thought. They said over 30 years, the state will save $187 billion in pension payments, more than three times greater than the Senate plan.
The House plan would also cut the $100 billion state pension debt by $21 billion, they said.
“All the bills that have been introduced in the House have savings in the neighborhood of three to four times what the Senate has done,” Nekritz said. “We know what this does. We don’t have to rely on people making choices.”
We Are One Illinois, a coalition of public employee unions that backs the Senate plan, said the House plan won’t save any money because it will be found unconstitutional by the courts. The coalition also said the House plan pushes too much of the pension solution onto workers.
Nekritz, though, said a lawsuit also has been threatened over the Senate plan.
“We don’t know what that outcome will be in the Supreme Court,” Nekritz said.
Doug Finke can be reached at 788-1527.